Recent FTAs Expected to Yield Nearly $2.5 Billion for Agriculture

P. Scott Shearer, Bockorny Group, Washington DC

Mon, 2011-10-17 17:11

In a bipartisan effort, Congress passed the long-awaited Free Trade Agreements (FTAs) with Colombia, Panama and South Korea. The International Trade Commission (ITC) estimates that when the three FTAs are fully implemented, they will create 250,000 jobs and the export revenue is expected to top $13 billion. The three trade agreements combined represent almost $2.5 billion of additional agricultural exports. Korea will be the United States’ most commercially significant FTA in more than 16 years. U.S. agriculture should see enormous benefit from the U.S.-Korea Free Trade Agreement Implementation Act (KORUS). Currently the average tariff for U.S. agricultural products sold to South Korea face 54% tariffs, compared with 9% for Korean agricultural goods sent to the United States. Under the agreement, almost two-thirds of U.S. farm products exported to South Korea will become duty-free immediately. These include wheat, corn, soybeans for crushing, whey for feed use, hides and skins, cotton, cherries, pistachios, almonds, orange juice, grape juice and wine. Korean tariffs on imports of beef muscle cuts will decline from the current 40% to zero in 15 equal annual reductions. Ninety percent of U.S. pork products will become duty-free by 2016. This is a reduction from current applied rates of 22.5 and 25% and applies to all frozen and processed pork products. The National Pork Producers Council (NPPC) estimates the three FTAs are worth an additional $11 to the price of each hog producers sell.

Reduce RFS During Corn Shortage – Congressmen Bob Goodlatte (R-VA) and Jim Costa (D-CA) have introduced the “Renewable Fuel Flexibility Act,” which would link the amount of corn ethanol required under the Renewable Fuels Standard (RFS) to the actual corn supply. The legislation would determine the amount of ethanol mandated based on corn stock-to-use ratio. The ethanol mandate would be reduced by 25% when the stocks-to-use ratio is projected to be less than 7% and decreasing it by 50% when the ratio would be 5% or less. Congressman Costa said, “This legislation will provide a relief valve for the corn-ethanol portion of the RFS to help ensure corn-based ethanol is not leading to corn shortages or even higher prices for farmers and consumers.” The legislation has been endorsed by the American Meat Institute, Grocery Manufacturer’s Association, National Cattlemen’s Beef Association, National Chicken Council, National Pork Producers Council, National Turkey Federation and Oxfam America.

Agriculture Asks for Two-Year Moratorium on Regulations – Over 75 agricultural groups and agribusinesses are asking the House and Senate Agriculture Committees to include in their recommendations to the Joint Select Committee on Deficit Reduction a two-year moratorium on all discretionary, non-essential regulatory actions that would “increase the cost of food and agricultural production and processing.” In a letter to the agriculture committees, the groups said, “Knowing that the costs of production will not be unduly increased by non-essential policies coming out of Washington is especially important to producers now, as the Select Committee continues its work and reductions in agriculture spending remain possible. The inclusion of this regulatory moratorium in your recommendations to the Select Committee would help provide certainty to farmers, ranchers and agribusinesses going forward.” Those signing the letter included the National Council of Farmer Cooperatives, Agricultural Retailors Association, American Farm Bureau Federation, American Soybean Association, CropLife America, National Cattlemen’s Association, National Corn Growers Associate, National Pork Producers Council, Sunkist Growers and USA Rice Federation.